Aircraft lessors granted interim protection for inspection and maintenance despite insolvency moratorium and deregistration dispute.

Aircraft lessors seeking interim protection under the insolvency moratorium were found entitled to limited access for inspection and maintenance where the leases had been terminated before the moratorium and deregistration had been sought under Rule 30(7) of the Aircraft Rules, 1937. The regulatory framework was treated as imposing a mandatory duty on the aviation authority, and the aircraft were viewed as assets requiring preservation rather than as unrestricted corporate debtor assets. Interim relief was therefore granted in part, permitting inspection and periodic maintenance, restraining removal or alteration of aircraft parts and records without consent, and directing special maintenance measures to prevent deterioration and loss of value.

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Issues: Whether the lessors were entitled to interim protection permitting inspection and maintenance of the aircraft, and restraining interference with the aircraft and its records, pending disposal of the writ petitions, despite the moratorium under the Insolvency and Bankruptcy Code, 2016.

Analysis: The aircraft had been leased under agreements that permitted termination on default and authorised deregistration without the lessee's consent. The petitioners had terminated the leases before the moratorium order and had sought deregistration under Rule 30(7) of the Aircraft Rules, 1937. The regulatory framework was treated as imposing a mandatory duty on the aviation authority, and the aircraft were held to remain valuable assets requiring preservation. The Court also noted that the aircraft were not to be treated as assets available to the corporate debtor in the manner urged by the respondents, and that interim protection was necessary to prevent deterioration, cannibalisation, and loss of value.

Conclusion: Interim relief was granted in part. The petitioners were permitted access for inspection and periodic maintenance, the respondents were restrained from removing or altering aircraft parts and records without consent, and special directions were issued for the aircraft requiring mandatory maintenance and engine runs.

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